BOSTON - EMC Corp.'s third-quarter profit jumped 77 percent, driven by growing sales of data storage software and hardware as well as a hefty gain from selling an ownership stake in fast-growing software maker VMware Inc.
Hopkinton, Mass.-based EMC said Thursday its net income for the July-September period was $492.9 million, or 23 cents per share, compared with a profit of $283.7 million, or 13 cents per share, in last year's third quarter.
Revenue rose 17 percent to $3.29 billion from $2.82 billion a year ago, exceeding the consensus estimate of analysts surveyed by Thomson Financial, who expected revenue of $3.12 billion.
Shares rose 4 percent, or 92 cents, to $23.45 at the open of trading.
EMC recorded a one-time gain of $115.2 million in the quarter, primarily from its sale of a 6-million share ownership stake in VMware to Cisco Systems Inc. Excluding that gain, EMC's profit was $377.8 million, or 17 cents per share, matching analysts' per-share profit expectations.
EMC said it will increase the amount of a stock buyback program from $1 billion to $2 billion. So far this year, EMC has bought 73 million EMC shares, returning $1.1 billion to shareholders.
In a conference call with analysts, EMC said it has no plans to sell off more shares of VMware, whose August stock debut was the biggest technology stock offering since Google debuted three years earlier. EMC spun off a 10 percent stake and remains the majority owner.
"We are very pleased with the performance of our asset mix, and have no futher plans to distribute more VMware shares," said Joe Tucci, EMC's chairman, president and chief executive, and also chairman of VMware.
EMC's third-quarter revenue from software licenses jumped 25 percent, outpacing the 9 percent growth in the storage systems business at EMC, whose rivals include IBM Corp., Hewlett-Packard Co., and Network Appliance Inc. Revenue from professional services and systems maintenance, a smaller business segment than the other two, grew by 25 percent.
EMC's North American business posted a 15 percent sales gain, compared with 21 percent growth overseas.
EMC did not offer specific expectations for full-year financial performance, but, as it did in July, said it remains on track to beat guidance outlined in January for a profit of 64 cents per share on revenue of at least $12.7 billion. Analysts expect a profit of 69 cents per share on revenue of $12.89 billion.
"Based on our results year-to-date and our expectations for a solid fourth quarter, we are now very clearly on track to exceed the annual financial targets we set in January," said Chief Financial Officer David Goulden.
EMC's stock had been stagnant in recent years. But it's gained more than 70 percent this year, a rise largely tied to VMware's IPO, but also on demand for data storage services and growth at many of EMC's recently acquired businesses.
EMC, which acquired VMware in 2004, now owns 86 percent of the software maker after the August IPO. Before the stock offering, Cisco and another Silicon Valley heavyweight, Intel Corp., bought small pieces of VMware, which already is one of the five top-valued software companies worldwide.
VMware specializes in so-called "virtualization" software that enables a single computer to function like multiple machines, which means that companies spend less on equipment - and less on energy in their data centers.
VMware last quarter posted revenue of $354 million, up 90 percent from a year ago.
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